Three new tax measures are set to take effect from Friday, September 1, in line with the schedule enshrined in the Finance Act ascended to by President William Ruto on June 29.
The new tax measures include Digital Asset tax, Electronic Tax Invoices and Export and Investment Promotion Levy rates on key products such as cement clickers used to manufacture Portland cement.
On the other hand, various tax penalties and rules on tax amnesty will take effect, as detailed below.
Digital Asset Tax
The tax targets income derived from the transfer or exchange of digital assets such as cryptocurrencies and is set at 3 per cent.
"A digital asset includes anything of value that is not tangible and cryptocurrencies, token codes, and numbers held in digital form and generated through cryptographic means or otherwise, by whatever name called.
"The owner of a platform or the person who facilitates the exchange or transfer of a digital asset shall deduct the digital asset tax and remit it to the Commissioner.," reads the Act in part.
As per the Act, the taxes will be remitted within five working days after the deduction.
Miscellaneous Fees and Levies
The 2023 Finance Act amended the Miscellaneous Fees and Levies Act, of 2016 and introduced an Export and Investment Promotion Levy on notable goods such as iron, non-alloy steel, kraft paper (cardboard) and sacks.
The levy is imposed on local manufacturers who export the goods overseas.
As per the schedule, cement clickers used to manufacture Portland cement, Bars and rods of iron or nonalloy steel, will face a levy of 17.5 per cent of the value of the exports.
On the other hand, the Finance Act imposes a levy of 10 per cent on the value of imported kraft paper (cardboard) and sacks.
Electronic Tax Invoices
This tax measure targets business people as they will be required to issue an electronic tax invoice through the system established by the taxman.
Business people will also maintain a record of stocks in the system established by the Kenya Revenue Authority (KRA).
The electronic tax excludes investment allowances, interest, emoluments, imports, airline passenger ticketing and similar payments.
"Where a tax law requires a taxpayer to issue an electronic tax invoice, submit a tax return in electronic form or pay a tax electronically, and the taxpayer fails to comply with that tax law, the Commissioner shall issue a notice in writing to the taxpayer requesting the reasons for the noncompliance.
"Where the reasons given under subsection (1) do not satisfy the Commissioner, the taxpayer shall be liable to a penalty of two times the tax due," read the Act in part.
Tax Amnesty Penalty
Any person who fails to pay a tax due as of December 31, 2022, by June 30, 2024, will be penalised through interest. Amnesty will also not be granted for the same.
While applying for tax amnesty, one must write to the KRA Commissioner and propose a payment plan for the outstanding amount.